My Corpus Reached All Time High And I am Worried

Just recently, my corpus has reached an all time high. I thought we are in the middle of a world wide pandemic. How come the markets don’t seem to care? Agreed that I don’t understand markets, but still, this is completely unreasonable. Various indices and stocks in India, as well as in the US, are hitting all time highs. But the economy is hurting. Where am I going wrong in my understanding? Well, there is nothing new happening really. Mr. Market has always been manic-depressive and probably will continue to be that way forever.


My corpus

Just 4 months ago I was talking about the huge drop is Sensex and how that affected my portfolio. And now here we are talking about my corpus hitting a new high all thanks to the soaring market. This can only mean one thing — an impending crash. But when I am not really sure. I have been wrong many times in predicting the market. I was predicting a crash for a good part of 2 years since early 2018 before something eventually happened in the form of COVID in 2020. Anyway, coming back to the point. After dropping some 5% during the bad market, my corpus has since recovered everything and then some more.


My corpus since Jan 2020

You will notice a sharp fall in the middle of January 2020 when Franklin Ultra decided to markdown Vodafone papers. After that the corpus was going steady up until March 2020 when COVID crushed the market and my corpus dipped down a bit but not much thanks to my asset allocation which was 85% in debt.


My investments

Is my corpus up because of any investments I made during this period? No. As you will notice in the chart below, in the initial part of the year I was moving investments from equity to debt up until mid of Feb 2020. Then there was quiet period where I did not do any investments until mid March. When the markets went down, I cautiously started moving investments from debt to equity from mid March to late April. Then, another disaster. Before I could execute my plan properly Franklin locked up most of my debt investments.


Debt investments or redemptions since Jan 2020. Peaks are investments and troughs are redemptions

Equity investments or redemptions since Jan 2020. Peaks are investments and troughs are redemptions

I could see some opportunity in the market but my hands were tied. I could do nothing because I did not want to redeem from my other debt investments in case Franklin debt goes dud or if Franklin decides to return my investments and I am saddled with a huge tax obligation. As you will notice, the period from late April is completely flat in both charts. I was neither selling or buying anything. To fund my daily expenses, I was dipping into my emergency fund during that time. My emergency fund is in my savings bank account and not invested in anything. Not invested in liquid funds and not even FD.


You might notice a slight blip towards the end of the graph around end of June. That redemption in debt investments and the subsequent equity investment was due the fact that Franklin made a partial payment from Vodafone segregated fund.


Conclusion

That’s my story so far. All I can say is that I am showing my corpus when the going is good. Because tomorrow (figuratively speaking) you may have to deal with bad news. Since the markets recovered so quickly and owning to my locked up debt funds, I am still at 83% debt down from a high of 90% in mid March.


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